This report examines the problem of strained relations between State universities and the State government and addresses why this condition might exist for many schools of higher education. It suggests that the proper role of the campus Chief Executive Officer (CEO) in improving state relations, and in all other institutional relations, is as educational leader. The importance of such leadership has grown even more pressing in recent years because of the many grievances that have been filed against higher education, such as science and athletic scandals; low graduation rates; sexual, drug, and alcohol abuse; and the misuse of government grants. It is suggested that the solution to building good relations between state and school is for the school to be seen as part of the solution to society's ills, not part of the problem; fundamental reform is needed and greatly improved communication. Ten key principles are presented for working effectively with policymakers. Among these principles are the following: (1) willingness to discuss the role of higher education in society; (2) coalition building; (3) building long-term relationships; (4) being prepared to address all relevant issues, even unpleasant ones; (5) better meeting management techniques; and (6) being willing to view things from the policymaker's perspective. (GLR)